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TDS Reports Fourth Quarter Results

02/25/2010
Provides Financial Guidance for 2010
CHICAGO, Feb 25, 2010 /PRNewswire via COMTEX/ -- Note: Comparisons are year over year unless otherwise noted.

4Q 2009 Highlights

Enterprise/TDS Corporate

  • Operating revenues were stable at $1.3 billion.
  • Repurchased 552,981 TDS common and special common shares; $247 million remaining on current authorization.

Wireless/U.S. Cellular

  • 354,000 retail gross additions; 39,000 retail net additions, of which 26,000 were postpay and 13,000 were prepaid.
  • 1 percent increase in service revenues to $986 million, despite a $17 million reduction in inbound roaming revenues.
  • 34 percent increase in data revenues to $190 million, representing 19 percent of service revenues.
  • Retail service ARPU (average revenue per unit) increased from $46.43 to $47.12.
  • Retail postpay churn low at 1.6 percent; postpay customers comprised 95 percent of retail customers.
  • Redeemed 8.75 percent senior notes; principal amount of $130 million.
  • $14 million impairment on licenses; $387 million in the fourth quarter of 2008.

Wireline/TDS Telecom

  • 17 percent increase in ILEC high-speed data customers.
  • 12 percent increase in ILEC high-speed data revenues, representing 18 percent of ILEC revenues.
  • ILEC equivalent access lines held steady at 775,900, primarily due to growth in high-speed data customers and acquisitions, offset by a loss of physical access lines.
  • Managed IP stations (ILEC and CLEC) grew to 13,900 from 2,700.

As previously announced, TDS will hold a teleconference Feb. 25, 2010 at 9:30 a.m. CST. Interested parties may listen to the call live via the Internet by accessing the Conference Calls page of www.teldta.com.

Telephone and Data Systems, Inc. (NYSE: TDS; TDS.S) reported operating revenues of $1,262.8 million for the fourth quarter of 2009, versus $1,264.0 million in the comparable period one year ago. Net income attributable to TDS was $16.5 million, or $0.15 per diluted share, impacted by a $14 million (pre-tax), or $0.07 diluted loss per share, charge for impairment of licenses. In the fourth quarter of 2008, net loss attributable to TDS was $168.9 million, or $1.49 diluted loss per share, impacted by a $414.4 million (pre-tax), or $1.84 diluted loss per share, charge for impairment of licenses.

For the twelve months ended Dec. 31, 2009, TDS reported operating revenues of $5,020.7 million, versus $5,092.0 million in 2008. Net income attributable to TDS for 2009 was $193.9 million, or $1.77 per diluted share, impacted by a $14 million (pre-tax), or $0.07 diluted loss per share, charge for impairment of licenses. In 2008, net income attributable to TDS was $93.5 million, or $0.80 diluted earnings per share, impacted by a $414.4 million (pre-tax), or $1.80 diluted loss per share, charge for impairment of licenses.

"Robust data and broadband offerings, combined with exceptional customer service, continued to be the key drivers of our businesses in 2009," said LeRoy T. Carlson, Jr., TDS president and CEO. "Though the economy and competitive pressures impacted results across the enterprise, we saw improvements in the key areas of data revenue and data penetration, and we ended the year poised to build on that success.

"Seventy-five percent of U.S. Cellular's customers had access to 3G speeds at the end of the year. Sales of smart phones and premium phones stimulated data use and drove strong increases in both overall data revenues and data revenue per customer. We improved retail net customer additions from the third quarter in both the prepaid and postpay segments, and churn, an important measure of our ability to serve our customers, also improved.

"Our wireline business, TDS Telecom, increased its ILEC high-speed data revenues in the quarter, and achieved 39 percent broadband penetration within the ILEC residential customer base by year-end. The company is aggressively driving its broadband strategy with new services and products for residential and commercial customers, and continues to build loyalty with value-oriented bundles of high-demand services, including video.

"Both businesses made important investments in infrastructure in 2009, and they will continue to do so in 2010. U.S. Cellular is moving ahead on multi-year initiatives to enable seamless integration of new billing and operational support systems, help the company better understand and target key customer segments, and promote online sales and self-service. In 2010, U.S. Cellular plans to stimulate and support further growth in demand for data by completing its 3G network expansion and continuing its 4G trials and developing its 4G rollout strategy.

"TDS Telecom recently completed the first phase of its leased 10G network and plans to connect two-thirds of its access lines to the network during the first quarter. The network will enable the company to offer more robust broadband services and leading technologies, providing greater reliability and security for its customers, while reducing costs. We are encouraged that TDS Telecom has been awarded $12.5 million to date in federal stimulus grants to bring broadband services to some of our most rural customers.

"At the enterprise level, TDS remains committed to generating long-term value for our shareholders. We are continuing our active share repurchase program and increased our dividend in 2009 for the 35th consecutive year. We have an exceptionally strong balance sheet and investment-grade credit ratings that will enable us to support our businesses as they move forward with their important initiatives."

Stock repurchase summary

The following represents repurchases of both TDS common and special common shares.

                                           Percent of
                            Number of        Shares            Cost
    Repurchase Period         Shares       Outstanding     (in millions)
    -----------------         ------       -----------     -------------
    2009 (fourth quarter)      552,981                         $16.6
    2009 (third quarter)     2,633,467                         $74.0
    2009 (second quarter)    2,684,267                         $73.9
    2009 (first quarter)       504,026                         $12.1
                               -------                         -----
    2009 (full year)         6,374,741          6%            $176.6

    2008 (full year)         5,861,822          5%            $199.6
                             ---------                        ------

    Total 2009 and 2008     12,236,563         10%            $376.2
                            ==========        ===             ======


Loss on impairment of intangible assets

In the fourth quarter of 2009, TDS recorded an impairment loss of $14 million (pre-tax) on licenses as a result of its annual impairment assessment of licenses and goodwill. In the fourth quarter of 2008, TDS recorded an impairment loss of $414.4 million on licenses, attributable to the deterioration in the credit and financial markets. The impairment charges had no impact on cash or cash flow.

                                             Impact of           Impact of
                                          Impairment for       Impairment for
                                      the three months ended   the year ended
                                            December 31,        December 31,
    (Dollars in millions, except per       --------------       ------------
     share amounts)                        2009      2008       2009    2008
    --------------------------------       ----      ----       ----    ----
    Net income attributable to TDS
     shareholders, excluding licenses
     impairments(1)                       $23.6     $40.3      $201.0  $302.7
                                          -----     -----      ------  ------
    Loss on impairment of intangible
     assets related to licenses           (14.0)   (414.4)      (14.0) (414.4)
    Income tax and noncontrolling
     interest impact of license
     impairment(1)                          6.9     205.2         6.9   205.2
                                            ---     -----         ---   -----
    Impact of licenses impairments on
     net income attributable to TDS
     shareholders(1)                       (7.1)   (209.2)       (7.1) (209.2)
                                           ----    ------        ----  ------
    Net income attributable to
     TDS shareholders                     $16.5   $(168.9)     $193.9   $93.5
                                          =====   =======      ======   =====
    Diluted earnings per share
     attributable to TDS shareholders,
     excluding license impairments(1)     $0.22     $0.35       $1.84   $2.60
    Impact of license impairments on
     diluted earnings (loss) per share
     attributable to TDS
     shareholders(1)                      (0.07)    (1.84)      (0.07)  (1.80)
                                          -----     -----       -----   -----
    Diluted earnings (loss) per share
     attributable to TDS shareholders     $0.15    $(1.49)      $1.77   $0.80
                                          =====    ======       =====   =====



    (1) These amounts are non-GAAP financial measures.  The purpose of
        presenting these measures is to provide information on the impact of
        losses on impairment related to licenses on results of operations.
        Such impairments are discrete, significant amounts that impact the
        comparability of the results of operations, and TDS believes it is
        useful to disclose these impacts.  The income tax and noncontrolling
        interest impact is calculated by allocating the losses on impairment
        to the respective consolidated subsidiaries, and applying the income
        tax rate and noncontrolling interest percentages applicable to these
        respective subsidiaries.

Guidance for year ending Dec. 31, 2010

This guidance represents the views of management as of Feb. 25, 2010 and should not be assumed to be accurate as of any other date. There can be no assurance that final results will not differ materially from this guidance. TDS undertakes no legal duty to update such information, whether as a result of new information, future events, or otherwise.

    U.S. Cellular
           Service Revenue                             $3,975 - $4,075 million
           Operating Income                                $250 - $350 million
           Depreciation, Amortization & Accretion(1)      Approx. $600 million
           Capital Expenditures                           Approx. $600 million

    TDS Telecom (ILEC and CLEC)
           Operating Revenues                                $740-$780 million
           Operating Income                                   $70-$100 million
           Depreciation, Amortization & Accretion(1)      Approx. $170 million
           Capital Expenditures                           Approx. $140 million

    (1)  Includes losses on disposals of assets




Conference call information

TDS will hold a conference call on Feb. 25, 2010 at 9:30 a.m. CST.

 

Before the call, certain financial and statistical information to be discussed during the call will be posted to the Conference Calls page of www.teldta.com, together with reconciliations to generally accepted accounting principles (GAAP) of any non-GAAP information to be disclosed. The call will be archived on the Conference Calls page of www.teldta.com.

About TDS

Telephone and Data Systems, Inc. (TDS), a Fortune 500(R) company, provides wireless, local and long-distance telephone, and broadband services to 7.3 million customers in 36 states through its business units, U.S. Cellular (wireless) and TDS Telecom (wireline). Founded in 1969 and headquartered in Chicago, TDS had 12,400 employees as of Dec. 31, 2009. For more information about TDS, visit www.teldta.com.

About U.S. Cellular

United States Cellular Corporation, the nation's sixth-largest wireless carrier, provides a comprehensive range of wireless products and services, excellent customer support, and a high-quality network to more than 6.1 million customers in 26 states. The Chicago-based company employed 8,900 full-time equivalent associates as of Dec. 31, 2009. For more information about U.S. Cellular, visit www.uscellular.com.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: All information set forth in this news release, except historical and factual information, represents forward-looking statements. This includes all statements about the company's plans, beliefs, estimates and expectations. These statements are based on current estimates, projections and assumptions, which involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Important factors that may affect these forward-looking statements include, but are not limited to: The ability of U.S. Cellular to successfully grow its markets; the overall economy; competition; the access to and pricing of unbundled network elements; the state and federal telecommunications regulatory environment; the value of assets and investments; adverse changes in the ratings afforded TDS and U.S. Cellular debt securities by accredited ratings organizations; industry consolidation; advances in telecommunications technology; uncertainty of access to the capital markets; risks and uncertainties relating to possible future restatements; pending and future litigation; changes in income tax rates, laws, regulations or rulings; acquisitions/divestitures of properties and/or licenses; and changes in customer growth rates, average monthly revenue per unit, churn rates, roaming revenue and terms, the availability of handset devices, or the mix of products and services offered by U.S. Cellular and TDS Telecom. Investors are encouraged to consider these and other risks and uncertainties that are discussed in the Form 8-K used by TDS to furnish this press release to the SEC, which are incorporated by reference herein.

For more information about TDS and its subsidiaries, visit the Web sites at:

    TDS:  www.teldta.com                    TDS Telecom: www.tdstelecom.com
    U.S. Cellular: www.uscellular.com



                        UNITED STATES CELLULAR CORPORATION
                              SUMMARY OPERATING DATA

    Quarter Ended   12/31/2009   9/30/2009  6/30/2009  3/31/2009  12/31/2008
                    ----------   ---------  ---------  ---------  ----------
    Total population
      Consolidated
       markets
       (1)(2)       89,712,000  85,118,000 83,726,000 83,726,000 83,014,000
      Consolidated
       operating
       markets(1)   46,306,000  46,306,000 46,306,000 46,306,000 46,009,000
    Market
     penetration
     at end of
     period
      Consolidated
       markets(3)         6.8%        7.2%       7.4%       7.5%        7.5%
      Consolidated
       operating
       markets(3)        13.3%       13.2%      13.3%      13.5%       13.5%
    All customers
      Total at end
       of period     6,141,000   6,131,000  6,155,000  6,243,000  6,196,000
      Gross
       additions       399,000     386,000    317,000    404,000    395,000
      Net additions
       (losses)         10,000     (24,000)   (88,000)    47,000     20,000
    Retail
     customers
      Total at end
       of period     5,744,000   5,705,000  5,711,000  5,770,000  5,707,000
      Gross
       additions       354,000     351,000    286,000    366,000    352,000
      Net postpay
       additions
       (losses)         26,000       8,000    (32,000)    60,000     41,000
      Net prepay
       additions
       (losses)         13,000     (14,000)   (27,000)     3,000     (8,000)
    Service revenue
     components
     (000s)
      Retail service
       revenue        $867,765    $865,867   $871,209   $874,098   $860,503
      Inbound roaming
       revenue          61,728      68,767     62,223     60,057     78,768
      Other revenue     56,814      50,289     41,323     47,719     37,681
                        ------      ------     ------     ------     ------
    Total service
     revenues (000s)  $986,307    $984,923   $974,755   $981,874   $976,952

    Divided by
     average
     customers (000s)    6,139       6,138      6,199      6,229      6,178
    Divided by three
     months in each
     quarter                 3           3          3          3          3
                           ---         ---        ---        ---        ---

    Average monthly
     revenue per
     unit(4)            $53.55      $53.49     $52.41     $52.54     $52.71
      Retail service
       revenue per
       unit (4)         $47.12      $47.02     $46.85     $46.78     $46.43
      Inbound roaming
       revenue per
       unit(4)           $3.35       $3.73      $3.35      $3.21      $4.25
      Other revenue
       per unit(4)       $3.08       $2.74      $2.21      $2.55      $2.03
    Postpay churn
     rate(5)              1.6%        1.7%       1.7%       1.5%        1.6%
    Capital
     expenditures
     (000s)           $189,000    $128,900    $91,200   $137,700   $190,000
    Cell sites in
     service             7,279       7,161      7,043      6,942      6,877



    (1) Used only to calculate market penetration of consolidated markets and
        consolidated operating markets, respectively, which is calculated by
        dividing customers by the total market population (without duplication
        of population in overlapping markets).
    (2) Includes 4.5 million incremental population counts resulting from the
        licenses awarded to King Street Wireless L.P. in December 2009.
    (3) Calculated by dividing the number of wireless customers at the end of
        the period by the total population of consolidated markets and
        consolidated operating markets, respectively, as estimated by
        Claritas.
    (4) Calculated by dividing the components of Service Revenues by the
        average customers and number of months in the quarter.
    (5) Calculated by dividing the total postpay customer disconnects during
        the quarter by the average postpay customer base for the quarter.



                         TELEPHONE AND DATA SYSTEMS, INC.
                              SUMMARY OPERATING DATA

    Quarter Ended        12/31/2009 9/30/2009 6/30/2009 3/31/2009 12/31/2008
                         ---------- --------- --------- --------- ----------
    TDS Telecom

      ILEC:
      Equivalent access
       lines(1)            775,900   772,700   775,800   777,100    776,700
      Physical access
       lines(2)            536,300   539,400   548,000   556,800    566,200
      High-speed data
       customers(3)        208,300   202,100   197,100   188,100    178,300
      Long-distance
       customers           362,800   356,500   354,100   348,900    347,000
      Managed IP
       stations(4)           1,900     1,500     1,200     1,000        600
      Capital expenditures
       (000s)              $26,900   $23,800   $26,200   $21,400    $50,200
      CLEC:
      Equivalent access
       lines(1)            355,900   364,100   372,300   381,000    393,000
      High-speed data
       customers(3)         36,900    37,600    38,700    39,700     40,800
      Managed IP
       stations(4)          12,000     9,600     6,400     4,100      2,100
      Capital expenditures
       (000s)               $6,800    $4,700    $5,700    $5,000     $7,200

    (1) Sum of physical access lines and high-capacity data lines, adjusted to
        estimate the equivalent number of physical access lines in terms of
        capacity, plus the number of Managed IP stations.
    (2) Individual circuits connecting customers to a telephone company's
        central office facilities.
    (3) The number of customers provided high-capacity data circuits via
        various technologies, including DSL, Managed IP and dedicated Internet
        circuit technologies.
    (4) The number of telephone handsets providing communications using packet
        networking technology.


                         TELEPHONE AND DATA SYSTEMS, INC.
                  CONSOLIDATED STATEMENT OF OPERATIONS HIGHLIGHTS
                          Three Months Ended December 31,
      (Unaudited, dollars and shares in thousands, except per share amounts)

                                                          Increase/(Decrease)
                                                          -------------------
                            2009(2)(3)      2008          Amount      Percent
                           -----------      ----          ------      -------
    Operating revenues
      U.S. Cellular         $1,060,997   $1,052,862       $8,135         1%
      TDS Telecom              198,048      204,790       (6,742)       (3)%
      All Other(1)               3,764        6,317       (2,553)      (40)%
                                 -----        -----       ------
                             1,262,809    1,263,969       (1,160)        -
                             ---------    ---------       ------
    Operating expenses
      U.S. Cellular
        Expenses excluding
         depreciation,
         amortization
         and accretion         879,636      845,013       34,623         4%
        Depreciation,
         amortization and
         accretion             146,807      143,709        3,098         2%
        Loss on asset
         disposals, net          7,528        6,602          926        14%
        Loss on impairment
         of intangible
         assets                 14,000      386,653     (372,653)      (96)%
                                ------      -------     --------
                             1,047,971    1,381,977     (334,006)      (24)%
                             ---------    ---------     --------
      TDS Telecom
        Expenses excluding
         depreciation,
         amortization and
         accretion             129,568      130,154         (586)        -
        Depreciation,
         amortization and
         accretion              42,044       40,751        1,293         3%
        Loss on asset
         disposals, net            649          508          141        28%
                                   ---          ---          ---
                               172,261      171,413          848         -
                               -------      -------          ---
      All Other(1)
        Expenses excluding
         depreciation and
         amortization              367        6,739       (6,372)      (95)%
        Depreciation and
         amortization            2,757        3,458         (701)      (20)%
        (Gain) Loss on asset
         disposals, net            119           (4)         123      >100%
        Loss on impairment of
         intangible assets           -       27,723      (27,723)      N/M
                                   ---       ------      -------
                                 3,243       37,916      (34,673)      (91)%
                                 -----       ------      -------
          Total operating
           expenses          1,223,475    1,591,306     (367,831)      (23)%
                             ---------    ---------     --------
    Operating income (loss)
      U.S. Cellular             13,026     (329,115)     342,141      >100%
      TDS Telecom               25,787       33,377       (7,590)      (23)%
      All Other (1)                521      (31,599)      32,120      >100%
                                   ---      -------       ------
                                39,334     (327,337)     366,671      >100%
                                ------     --------      -------
    Investment and other
     income (expense)
      Equity in earnings of
       unconsolidated entities  23,698       22,867          831         4%
      Interest and dividend
       income                    2,686        3,313         (627)      (19)%
      Interest expense         (31,777)     (29,265)      (2,512)       (9)%
      Other, net                   496          127          369      >100%
                                   ---          ---          ---
                                (4,897)      (2,958)      (1,939)      (66)%
                                ------       ------       ------
    Income (loss) before
     income  taxes              34,437     (330,295)     364,732      >100%
      Income tax expense
       (benefit)                11,909     (133,443)     145,352      >100%
                                ------     --------      -------
    Net income  (loss)          22,528     (196,852)     219,380      >100%
    Less: Net (income) loss
     attributable to
     noncontrolling
     interests, net of tax      (6,010)      27,926      (33,936)     >100%
                                ------       ------      -------
    Net income (loss)
     attributable to TDS
     shareholders               16,518     (168,926)     185,444      >100%
      Preferred dividend
       requirement                 (13)         (13)           -         -
                                   ---          ---          ---
    Net income (loss)
     available to common       $16,505    $(168,939)    $185,444      >100%
                               =======    =========     ========

    Basic weighted average
     shares outstanding        106,166      113,711       (7,545)       (7)%
    Basic earnings (loss)
     per share attributable
     to TDS shareholders         $0.16       $(1.49)       $1.65      >100%

    Diluted weighted average
     shares outstanding        106,489      113,711       (7,222)       (6)%
    Diluted earnings (loss)
     per share attributable
     to TDS shareholders         $0.15       $(1.49)       $1.64      >100%



    (1) Consists of Suttle Straus printing and distribution operations,
        corporate operations and intercompany eliminations.

    (2) During the three months ended December 31, 2009, U.S. Cellular
        operating expenses excluding depreciation, amortization and accretion
        were reduced by a $7.1 million out-of-period adjustment to correct
        rent expense.  Management does not believe that the adjustment is
        material to the current year or any prior year's earnings, earnings
        trends or financial statement line items.  The adjustment was recorded
        in the three months ended December 31, 2009 and no prior periods were
        adjusted.

    (3) During the three months ended December 31, 2009, TDS recorded
        adjustments that decreased and increased U.S. Cellular operating
        expenses excluding depreciation, amortization and accretion by $9.7
        million and $11.6 million, respectively, to reflect revised estimates
        related to customer usage charges and bad debts expense.  The net of
        these adjustments was an increase to U.S. Cellular operating expenses
        excluding depreciation, amortization and accretion of $1.9 million
        during the three months ended December 31, 2009.

    N/M - Percentage change not meaningful





                         TELEPHONE AND DATA SYSTEMS, INC.
                  CONSOLIDATED STATEMENT OF OPERATIONS HIGHLIGHTS
                              Year Ended December 31,
      (Unaudited, dollars and shares in thousands, except per share amounts)

                                                           Increase/(Decrease)
                                                           -------------------
                              2009(2)         2008         Amount     Percent
                           -------------------------       ------     -------
    Operating revenues
      U.S. Cellular        $4,214,611     $4,243,185     $(28,574)      (1)%
      TDS Telecom             789,852        824,282      (34,430)      (4)%
      All Other(1)             16,211         24,552       (8,341)     (34)%
                               ------         ------       ------
                            5,020,674      5,092,019      (71,345)      (1)%
                            ---------      ---------      -------
    Operating expenses
      U.S. Cellular
        Expenses excluding
         depreciation,
         amortization and
         accretion          3,288,370      3,228,513       59,857        2%
        Depreciation,
         amortization and
         accretion            570,658        576,931       (6,273)      (1)%
        Loss on asset
         disposals, net        15,176         23,378       (8,202)     (35)%
        Loss on impairment
         of intangible
         assets                14,000        386,653     (372,653)     (96)%
                               ------        -------     --------
                            3,888,204      4,215,475     (327,271)      (8)%
                            ---------      ---------     --------
      TDS Telecom
        Expenses excluding
         depreciation,
         amortization and
         accretion            527,570        522,815        4,755        1%
        Depreciation,
         amortization and
         accretion            167,316        158,366        8,950        6%
        Loss on asset
         disposals, net         2,401            857        1,544     >100%
                                -----            ---        -----
                              697,287        682,038       15,249        2%
                              -------        -------       ------
      All Other (1)
        Expenses excluding
         depreciation and
         amortization          15,193         23,788       (8,595)     (36)%
        Depreciation and
         amortization          11,996         14,780       (2,784)     (19)%
        Loss on asset
         disposals, net           188             61          127     >100%
        Loss on impairment
         of intangible assets       -         27,723      (27,723)     N/M
                                  ---         ------      -------
                               27,377         66,352      (38,975)     (59)%
                               ------         ------      -------
          Total operating
           expenses         4,612,868      4,963,865     (350,997)      (7)%
                            ---------      ---------     --------
    Operating income (loss)
      U.S. Cellular           326,407         27,710      298,697     >100%

      TDS Telecom              92,565        142,244      (49,679)     (35)%
      All Other (1)           (11,166)       (41,800)      30,634       73%
                              -------        -------       ------
                              407,806        128,154      279,652     >100%
                              -------        -------      -------
    Investment and other
     income (expense)
      Equity in earnings
       of unconsolidated
       entities                90,732         89,812          920        1%
      Interest and dividend
       income                  11,121         39,131      (28,010)     (72)%
      Gain on investments
       and financial
       instruments                  -         31,595      (31,595)     N/M

      Interest expense       (124,557)      (137,899)      13,342       10%
      Other, net                2,000          2,213         (213)     (10)%
                                -----          -----         ----
        Total investment
         and other income
         (expense)            (20,704)        24,852      (45,556)    >100%
                              -------         ------      -------
    Income before income
     taxes                    387,102        153,006      234,096     >100%
      Income tax expense      133,376         30,093      103,283     >100%
                              -------         ------      -------
    Net income                253,726        122,913      130,813     >100%
      Less: Net income
       attributable to
       noncontrolling
       interests, net of tax  (59,824)       (29,372)     (30,452)    >100%
                              -------        -------      -------
    Net income attributable
     to TDS shareholders      193,902         93,541      100,361     >100%
      Preferred dividend
       requirement                (51)           (52)           1        2%
                                  ---            ---          ---
    Net income available to
     common                  $193,851        $93,489     $100,362     >100%
                             ========        =======     ========

    Basic weighted average
     shares outstanding       109,339        115,817       (6,478)      (6)%
    Basic earnings per
     share attributable
     to TDS shareholders        $1.77          $0.81        $0.96     >100%

    Diluted weighted average
     shares outstanding       109,577        116,255       (6,678)      (6)%
    Diluted earnings per
     share attributable to
     TDS shareholders           $1.77          $0.80        $0.97     >100%



    (1) Consists of Suttle-Straus printing and distribution operations,
        corporate operations and intercompany eliminations.

    (2) During the twelve months ended December 31, 2009, U.S. Cellular
        operating expenses excluding depreciation, amortization and accretion
        were reduced by a $6.5 million out-of-period adjustment to correct
        rent expense. Management does not believe that the adjustment is
        material to the current year or any prior year's earnings, earnings
        trends or financial statement line items.  The adjustment was recorded
        in the twelve months ended December 31, 2009 and no prior periods were
        adjusted.

    N/M - Percentage change not meaningful




                           TELEPHONE AND DATA SYSTEMS, INC.
                        CONSOLIDATED BALANCE SHEET HIGHLIGHTS
                          (Unaudited, dollars in thousands)


                                       ASSETS

                                                    December 31,  December 31,
                                                        2009          2008
                                                        ----          ----
    Current assets

      Cash and cash equivalents                        $670,992      $777,309
      Short-term investments                            113,275        27,705
      Accounts receivable from customers and other      511,914       516,849
      Inventory                                         156,987       122,377
      Other current assets                              190,974       184,696
                                                        -------       -------
                                                      1,644,142     1,628,936
                                                      ---------     ---------

    Investments
      Licenses                                        1,443,025     1,441,440
      Goodwill                                          707,840       707,079
      Customer lists                                     26,589        34,032
      Investments in unconsolidated entities            203,799       205,768
      Other investments                                   9,785        10,623
                                                          -----        ------
                                                      2,391,038     2,398,942
                                                      ---------     ---------

    Property, plant and equipment, net
      U.S. Cellular                                   2,601,338     2,620,376
      TDS Telecom                                       880,378       918,454
      Other                                              26,129        30,094
                                                         ------        ------
                                                      3,507,845     3,568,924
                                                      ---------     ---------

    Other assets and deferred charges                    65,759        55,614
                                                         ------        ------

    Total assets                                     $7,608,784    $7,652,416
                                                     ==========    ==========



                         TELEPHONE AND DATA SYSTEMS, INC.
                       CONSOLIDATED BALANCE SHEET HIGHLIGHTS
                         (Unaudited, dollars in thousands)

                              LIABILITIES AND EQUITY

                                                     December 31, December 31,
                                                         2009         2008
                                                         ----         ----
    Current liabilities
        Current portion of long-term debt                $2,509       $15,337
        Accounts payable                                347,348       319,575
        Customer deposits and deferred revenues         167,963       174,101
        Accrued interest                                 12,227        14,236
        Accrued taxes                                    39,644        25,192
        Accrued compensation                             93,524        90,512
        Other current liabilities                       117,081       134,334
                                                        -------       -------
                                                        780,296       773,287
                                                        -------       -------

    Deferred liabilities and credits
        Net deferred income tax liability               517,762       471,623
        Other deferred liabilities and credits          373,862       368,045
                                                        -------       -------
                                                        891,624       839,668
                                                        -------       -------

    Long-term debt                                    1,492,908     1,621,422
                                                      ---------     ---------

    Noncontrolling interests with redemption features       727           589
                                                            ---           ---

    Equity
      TDS stockholders' equity
        Common Shares, $.01 par value                       571           571
        Special Common Shares, $.01 par value               634           634
        Series A Common Shares, $.01 par value               65            65
        Capital in excess of par value                2,088,807     2,066,597
        Treasury Shares, at cost
          Common Shares                                (217,381)     (163,017)
          Special Common Shares                        (464,268)     (350,091)
        Accumulated other comprehensive income           (2,710)      (16,812)
        Retained earnings                             2,371,587     2,229,540
                                                      ---------     ---------
          Total TDS stockholders' equity              3,777,305     3,767,487
                                                      ---------     ---------

    Preferred shares                                        832           852
    Noncontrolling interests                            665,092       649,111
                                                        -------       -------

        Total equity                                  4,443,229     4,417,450
                                                      ---------     ---------

    Total liabilities and equity                     $7,608,784    $7,652,416
                                                     ==========    ==========



                             BALANCE SHEET HIGHLIGHTS
                                 December 31, 2009
                         (Unaudited, dollars in thousands)

                                              TDS
                           U.S.      TDS   Corporate Intercompany     TDS
                         Cellular  Telecom  & Other  Eliminations Consolidated
                         --------  -------  -------  ------------ ------------
    Cash and cash
     equivalents         $294,411   $32,288  $344,293         $-     $670,992
    Affiliated cash
     investments                -   274,687         -  (274,687)            -
    Short-term
     investments              330   112,945         -         -       113,275
    Notes receivable-
     affiliates                 -         -     5,005    (5,005)            -
                              ---       ---     -----    ------           ---
                         $294,741  $419,920  $349,298 $(279,692)     $784,267
                         ========  ========  ======== =========      ========
    Licenses, goodwill
     and customer
     lists             $1,933,820  $438,862 $(195,228)       $-    $2,177,454
    Investment in
     unconsolidated
     entities             161,481     3,660    44,766    (6,108)      203,799
    Other investments       4,214     2,178     3,393         -         9,785
                            -----     -----     -----       ---         -----
                       $2,099,515  $444,700 $(147,069)  $(6,108)   $2,391,038
                       ==========  ======== =========   =======    ==========
    Property, plant
     and equipment,
     net               $2,601,338  $880,378   $26,129        $-    $3,507,845
                       ==========  ========   =======       ===    ==========
    Notes
     payable-affiliates        $-    $5,005  $274,687 $(279,692)           $-
                              ===    ======  ======== =========           ===
    Long-term debt:
      Current portion         $76      $391    $2,042        $-        $2,509
      Non-current
       portion            867,522     2,280   623,106         -     1,492,908
                          -------     -----   -------       ---     ---------
        Total            $867,598    $2,671  $625,148        $-    $1,495,417
                         ========    ======  ========       ===    ==========
    Preferred shares           $-        $-      $832        $-          $832
                              ===       ===      ====       ===          ====
    Capital
     expenditures:
      Quarter ended
       12/31/09          $189,000   $33,700  $(2,100)        $-      $220,600
      Year ended
       12/31/09          $546,800  $120,500    $3,900        $-      $671,200



                              TDS TELECOM HIGHLIGHTS
                          Three Months Ended December 31,
                         (Unaudited, dollars in thousands)

                                                           Increase/(Decrease)
                                                           ------------------
                                           2009     2008    Amount   Percent
                                           ----     ----    ------   -------
    Local Telephone Operations
      Operating revenues
        Voice                            $45,304  $49,649   $(4,345)     (9)%
        Data                              26,965   24,171     2,794      12%
        Network access                    69,364   68,476       888       1%
        Miscellaneous                      9,840   10,735      (895)     (8)%
                                           -----   ------      ----
                                         151,473  153,031    (1,558)     (1)%
                                         -------  -------    ------
      Operating expenses
        Cost of services and products     47,588   45,241     2,347       5%
        Selling, general and
         administrative expenses          42,996   42,579       417       1%
        Depreciation, amortization and
         accretion                        35,873   34,340     1,533       4%
        Loss on asset disposals              456      434        22       5%
                                             ---      ---       ---
                                         126,913  122,594     4,319       4%
                                         -------  -------     -----
      Operating income                   $24,560  $30,437   $(5,877)    (19)%
                                         -------  -------   -------

    Competitive Local Exchange Carrier
     Operations
        Revenues                         $48,940  $53,295   $(4,355)     (8)%
                                         -------  -------   -------

        Expenses excluding depreciation,
         amortization and accretion       41,349   43,870    (2,521)     (6)%
        Depreciation, amortization and
         accretion                         6,171    6,411      (240)     (4)%
        Loss on asset disposals              193       74       119    >100%
                                             ---      ---       ---
                                          47,713   50,355    (2,642)     (5)%
                                          ------   ------    ------

      Operating income                    $1,227   $2,940   $(1,713)    (58)%
                                          ------   ------   -------

    Intercompany revenues                $(2,365) $(1,536)    $(829)    (54)%
    Intercompany expenses                 (2,365)  (1,536)     (829)    (54)%
                                          ------   ------      ----
                                               -        -         -       -
                                             ---      ---       ---

    Total TDS Telecom operating income   $25,787  $33,377   $(7,590)    (23)%
                                         =======  =======   =======



                              TDS TELECOM HIGHLIGHTS
                         Twelve Months Ended December 31,
                         (Unaudited, dollars in thousands)

                                                           Increase/(Decrease)
                                                           -------------------
                                        2009      2008      Amount    Percent
                                        ----      ----      ------    -------
    Local Telephone Operations
      Operating revenues
        Voice                         $187,223  $203,372  $(16,149)      (8)%
        Data                           103,682    90,059    13,623       15%
        Network access                 271,276   278,484    (7,208)      (3)%
        Miscellaneous                   37,346    39,119    (1,773)      (5)%
                                        ------    ------    ------
                                       599,527   611,034   (11,507)      (2)%
                                       -------   -------   -------
      Operating expenses
        Cost of services and products  194,030   184,285     9,745        5%
        Selling, general and
         administrative expenses       171,250   166,787     4,463        3%
        Depreciation, amortization
         and accretion                 142,913   134,935     7,978        6%
        Loss on asset disposals          1,949       466     1,483     >100%
                                         -----       ---     -----
                                       510,142   486,473    23,669        5%
                                       -------   -------    ------

      Operating income                 $89,385  $124,561  $(35,176)     (28)%
                                       -------  --------  --------

    Competitive Local Exchange Carrier
     Operations
        Revenues                      $199,375  $220,002  $(20,627)      (9)%
                                      --------  --------  --------

        Expenses excluding
         depreciation, amortization
         and accretion                 171,340   178,497    (7,157)      (4)%
        Depreciation, amortization
         and accretion                  24,403    23,431       972        4%
        Loss on asset disposals            452       391        61       16%
                                           ---       ---       ---
                                       196,195   202,319    (6,124)      (3)%
                                       -------   -------    ------

      Operating income                  $3,180   $17,683  $(14,503)     (82)%
                                        ------   -------  --------

    Intercompany revenues              $(9,050)  $(6,754)  $(2,296)     (34)%
    Intercompany expenses               (9,050)   (6,754)   (2,296)     (34)%
                                        ------    ------    ------
                                             -         -         -        -
                                           ---       ---       ---

    Total TDS Telecom operating income $92,565  $142,244  $(49,679)     (35)%
                                       =======  ========  ========




                             TELEPHONE AND DATA SYSTEMS, INC.
                           CONSOLIDATED STATEMENT OF CASH FLOWS
                             Twelve Months Ended December 31,
                             (Unaudited, dollars in thousands)

                                                         2009        2008
                                                         ----        ----
    Cash flows from operating activities
      Net income                                       $253,726    $122,913
        Add (deduct) adjustments to reconcile net
         income to net cash flows from operating
         activities
            Depreciation, amortization and accretion    749,970     750,077
            Bad debts expense                           115,989      83,004
            Stock-based compensation expense             32,486      22,693
            Deferred income taxes, net                   31,053    (437,919)
            Gain on investments and financial
             instruments, net                                 -     (31,595)
            Equity in earnings of unconsolidated
             entities                                   (90,732)    (89,812)
            Distributions from unconsolidated entities   91,587      92,335
            Loss on impairment of intangible assets      14,000     414,376
            Loss on asset disposals, net                 17,765      24,296
            Noncash interest expense                      4,412      10,125
            Excess tax benefit from stock awards            (25)     (1,966)
            Other operating activities                      (46)     (1,831)
        Changes in assets and liabilities
            Accounts receivable                        (110,258)    (79,427)
            Inventory                                   (34,566)    (17,123)
            Accounts payable                             29,646       6,804
            Customer deposits and deferred revenues      (6,165)      7,692
            Accrued taxes                                56,068     (11,725)
            Accrued interest                             (2,009)     (4,221)
            Other assets and liabilities                (50,307)     (9,804)
                                                        -------      ------
                                                      1,102,594     848,892
                                                      ---------     -------
    Cash flows from investing activities
      Additions to property, plant and equipment       (671,165)   (734,923)
      Cash paid for acquisitions and licenses           (29,276)   (389,189)
      Cash received from divestitures                        50       6,838
      Proceeds from disposition of investments                -     259,017
      Cash paid to settle derivative liabilities              -     (17,404)
      Cash paid for short-term investments             (109,230)    (27,446)
      Cash received from short-term investments          23,660           -
      Other investing activities                          4,515         355
                                                          -----         ---
                                                       (781,446)   (902,752)
                                                       --------    --------
    Cash flows from financing activities
      Borrowings from revolving credit facilities             -     100,000
      Repayment of revolving credit facilities                -    (100,000)
      Repayment of long-term debt                      (143,078)     (9,448)
      Settlement of variable prepaid forward contracts        -     (47,357)
      TDS Common Shares and Special Common Shares
       reissued for benefit plans, net of tax payments      819       1,409
      U.S. Cellular Common Shares reissued for benefit
        plans, net of tax payments                          (82)     (2,288)
      Excess tax benefit from stock awards                   25       1,966
      Repurchase of TDS Common and Special Common
       Shares                                          (178,536)   (197,672)
      Repurchase of U.S. Cellular Common Shares         (33,585)    (28,366)
      Dividends paid                                    (46,798)    (47,320)
      Payment of debt issuance costs                    (10,079)          -
      Distributions to noncontrolling interests         (17,533)    (16,769)
      Other financing activities                          1,382       2,568
                                                          -----       -----
                                                       (427,465)   (343,277)
                                                       --------    --------
    Net decrease in cash and cash equivalents          (106,317)   (397,137)
    Cash and cash equivalents
      Beginning of period                               777,309   1,174,446
                                                        -------   ---------
      End of period                                    $670,992    $777,309
                                                       ========    ========




SOURCE Telephone and Data Systems, Inc.

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